Space start-ups become a magnet for investors

Warren Ferster

WASHINGTON – It should surprise no one who’s been paying attention that investment in new and maturing space ventures has accelerated sharply in the past few years.

Consider just a few recent deals that have grabbed headlines: Google’s $500 million purchase of start-up Skybox Imaging in 2014; Google and Fidelity’s $1 billion investment in rocket maker SpaceX in 2015; and a combined $1.2 billion in financing for OneWeb’s proposed low-orbiting broadband satellite constellation from Softbank and other investors 2016.

Along with these blockbusters has been a steady drumbeat of smaller investments, mostly in the $10 million to $20 million range, by assorted venture capital firms, many based in Silicon Valley.

These investments are all captured in a new report from Bryce Space and Technology that covers the period from 2000-2016, shedding light on both the sources and patterns of the cash flow. What quickly becomes clear is that, like the types of investments they make, start-up space financiers come in all shapes and sizes, from risk-taking angel and venture capital investors to corporations and lending institutions that answer to boards of directors.

These groups and individuals collectively sank more than $16.6 billion into space start-ups – defined as companies have received some level of seed or venture capital funding – during the 17-year period. Excluding debt financing, that number drops to a still-substantial $11.6 billion, according to the report, which analyzed information from public sources, internal proprietary data sets, and interviews with subject matter experts.

Start-Up Space 2017 (subtitled Update on Investment in Commercial Space Ventures) is the second installment of what will be an annual survey. The report includes updated information on years covered by the previous version as new information becomes available.

As one might expect, most of the investment activity – some two thirds of the total, not counting debt – occurred in the last five years of the study period.

Breaking that down further, the report shows the largest source of investment from 2012 to 2016 was venture capital, with nearly $4 billion invested in space start-ups during those five years. The report defines venture capital as financing from firms or consortia with healthy appetites for risk that usually arrives in the early stages of a start-up. However, the biggest investments classified as venture capital in the study, the aforementioned cash infusions in SpaceX and OneWeb, do not fit neatly into that category.